Copyright © 2016 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Would the owner of the PNC Arena where the Carolina Hurricanes play hockey be better off financially if the arena were to shut down? Original blog posting (February 16, 2016)

Carolina Hurricanes & PNC Arena Gale Force Holdings LP owns the Carolina Hurricanes, a professional hockey team, and PNC Arena where the Hurricanes play A recent article claims the owner lost $1.3 million in the year ended June 2015 operating the PNC Arena Gale Force has leased PNC Arena through 2024 Photographer:

Gale Force Holdings LP Consolidated Statement of Operations Year ended June 30, 2015 Revenues $ 23,055,725 Operating expenses 22,748,229 Operating income (loss) $ 307,496 Depreciation & Amortization (1,707,607) Other Income/Non-Arena Related 105,864 NET INCOME (LOSS) $ (1,294,247)

Question 1 Does “Depreciation & Amortization” affect cash (ignore income taxes)?

Question 2 The title of the Forbes news article stated “Carolina Hurricanes Owner Lost $1.3 Million Operating PNC Arena.” Did the owner actually incur out-of-pocket expenses causing the loss?

Question 3 If the Carolina Hurricanes Owner were to suddenly shut down the PNC Arena, would he be better or worse off financially? Explain. Assume that there is no alternate use for the PNC Arena.

Question Recap 1.Does “Depreciation & Amortization” affect cash (ignore income taxes)? 2.The title of the Forbes news article stated “Carolina Hurricanes Owner Lost $1.3 Million Operating PNC Arena.” Did the owner actually incur out-of-pocket expenses causing the loss? 3.If the Carolina Hurricanes Owner were to suddenly shut down the PNC Arena, would he be better or worse off financially? Explain. Assume that there is no alternate use for the PNC Arena.

Copyright © 2016 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Questions or comments? Contact Dr. Wendy Tietz at